Posted by Ward on August 31, 2004
In Reply to: Break even posted by Lotg (OZ) on August 31, 2004
: OK, well in answering the previous post, I've raised a query in my own mind. The term 'break even'. I know what it means, but literally it's an odd term. How can you 'break even'? Traditionally, to break even is to end up where you started - ie. no loss, no win. But if I take the words literally, it suggests that you actually break through that 'even' point, which suggests either winning or losing. Can anyone explain to me how this term came about and what I'm missing here?
Goddess, look up breakeven chart on Google and the concept will be clear. A breakeven chart is a way of displaying data concerning an economic activity. It allows for the display of the total of expenses (ususally includes the fixed costs and those variable with volume) and the revenues or income associated with producing and selling that volume of wigits or whatever. Breakeven refers to the 'breakeven point' -- the volume level at which the revenues and the costs are even. Presumably, after that point is reached, when the prices are set over the unit cost, the result will be a profit on each additional unit.